 The state's Department of Revenue gave Northstar, a consortium of
companies that handles lottery machines in Illinois, the nod in
September to take over day-to-day operations of the
$2-billion-a-year lottery.The company is set to take over the
lottery July 1 and has promised to generate more sales -- $1 billion
in five years. In return Northstar could get $313 million.
But those dates are not the ones that caught the eye of Illinois
Auditor General Bill Holland. On Tuesday, Holland released an audit
that focuses on how the state chose Northstar.
Among the findings, the Illinois Department of Revenue hired an
assistant on May 29, 2010, to facilitate the selection of a new
lottery manager. But the audit states the assistant started working
on May 12, 2010, 17 days prior to signing a contract. And the
deadline for potential lottery managers to submit their proposals
was May 27, 2010, two days prior to the contract being awarded.
This report "documents a process that is flawed," said Holland in
an interview with Illinois Statehouse News.
Mike Klemens, a spokesman for the Department of Revenue,
disagreed with the audit's findings. He said the process of picking
a new lottery manager was "fair and transparent" and resulted in the
state hiring a company that could make a lot of money for Illinois.
Klemens dismissed the questions raised in Holland's audit.
"What I find (in the audit) is a lot of speculation and ‘what
if's," said Klemens. "There is not a statement that, 'Hey, you did
something wrong.'"
Holland angrily rejected any notion of speculation.
"We clearly document that the Department of Revenue paid an
adviser nearly $5 million without any clarity about what he did, or
when he did it," said Holland. "We clearly document that scoring
sheets were late. There is no speculation about it."
The dates on the scoring sheets, which were used to rank bidders
for the lottery management spot, are another problem highlighted in
Holland's audit.
The report states that on Aug. 3, one of the people helping with
the selection of a new lottery manager received the three proposals,
containing more than 2,600 pages, which needed to be scored in three
days. Another person on the team picked up another set of proposals
on Sept. 8, signed and dated them as scored the next day. The audit
makes note of the apparent speed reading.
"Each of the two proposals was in excess of 800 pages and
contained the Final Business Plans on how the proposer would manage
the $2 billion State Lottery," stated the report.
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Klemens again brushed off the report and said some scores were
hand-delivered, while others were emailed. Bottom line, Klemens
said, the process was proper.
"The auditor is saying there's a lack of documentation (about the
score sheets)," Klemens added. "But proper documentation is in the
eye of the beholder."
Holland said his report deals with facts, not interpretations.
Holland's facts are the first that shed light on what has been a
shrouded process.
Byron Boothe, vice president of government relations with
Intralot, which also bid for the lottery contract, said the report
confirms what he saw firsthand.
"The Department of Revenue has been playing ‘hide the ball,’"
said Boothe. "This audit shows it's not just hide the ball from us,
but from the auditors and the people of Illinois."
Boothe and the Athens, Greece-based Intralot have been trying to
get answers about the selection process and the final agreement
between Illinois and Northstar since this past year, but the
Department of Revenue has shut him out.
State Rep. Jack Franks, D-Woodstock, said the state needs to stop
the transfer of the lottery to Northstar before the group takes over
July 1.
"At the very least, (the Department of Revenue) should not go
forward until we have answered these very serious questions," said
Franks.
Holland would not speculate on when or if the Legislature would
step in, but the dates surrounding the deal with Northstar should
give state leaders pause.
"This is a $2 billion state asset. And the process (to pick a new
manager) was flawed," Holland said.
[Illinois
Statehouse News; By BENJAMIN YOUNT]
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